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New Texas Laws Taking Effect September 1, 2017

Though employment issues were not the focus of the 85th Regular and Special Legislative Sessions of the Texas Legislature, Texas employers should be aware of a handful of new Texas laws which take effect September 1, 2017.

Leave Protection for Foster Parents

The Texas Labor Code added Section 21.0595, which now makes it an unlawful employment practice for employers to have a leave policy which allows an employee to take personal leave to care for or otherwise assist a sick biological or adopted child but does not provide that same leave for a foster child. The statute does not require an employer to provide such leave, but if such a leave policy exists it must also apply to foster parents. Texas employers should review their leave policies to make sure they do not specifically exclude foster children or list only biological or adopted children as covered.

First Responders Can Now Bring Suit for Workers’ Compensation Retaliation

Section 451.0025 of the Texas Labor Code was amended to specifically waive sovereign or governmental immunity from suit for workers’ compensation retaliation claims brought by first responders. A first responder is defined as a public safety employee or volunteer whose duties include rapid emergency response. They include firefighters, peace officers, and emergency medical services personnel. Unlike claims brought by employees of private employers under Chapter 451, there is a limitations of damages provision.

Changes to the Texas Uniform Trade Secrets Act

In May 2017, the Texas Legislature passed changes to the Texas Uniform Trade Secrets Act (TUTSA), thereby aligning it with both federal and many states’ laws. These amendments largely codified already existing law and apply to cases filed on or after September 1, 2017.

These amendments come on the cusp of two defining events: the first being Congress’s enactment of the Defend Trade Secrets Act (DTSA); and second, the Texas Supreme Court’s decision in In re M-I LLC, 505 S.W. 3d 569 (Tex. 2016).

Substantive changes to the TUTSA:

Defining the phrase “willful and malicious misappropriation” - TUTSA has almost always provided for an award of exemplary damages and attorneys’ fees for conduct a jury finds to be “willful and malicious misappropriation” on the defendant’s behalf. Though these damages were always available under the statute, the statute did not define “willful and malicious misappropriation,” therefore creating confusion about what constitutes conduct sufficient to result in exemplary damages. Under the amendment, the phrase means “intentional misappropriation resulting from the conscious disregard of the rights of the owner of the trade secret.” H.B. 1995, Section 1(7) (“‘Willful and malicious misappropriation’ means intentional misappropriation resulting from the conscious disregard of the rights of the owner of the trade secret.”).

Expanded definition of the term “Trade Secret” - Under the amendment, trade secret now means all forms of information including “business, scientific, technical, economic, or engineering information…whether tangible or intangible and whether or how stored, compiled, memorialized physically, electronically, graphically, photographically, or in writing.” This change brings the TUTSA more in line with the DTSA, which specifically lists these items in the statute.

Codification of the Texas Supreme Court’s Seven Factor Balancing Test - The Act codifies the Texas Supreme Court’s decision in In re M-I LLC, 505 S.W. 3d 569 (Tex. 2016), wherein the Court developed a balancing test designed to weigh the right of a party to participate in proceedings brought against him against the trade secret owner’s right to protect the confidentiality of the trade secret. The amendment presumes that parties who have been sued for misappropriation should be permitted to participate and hear the evidence against them, and should only be excluded subject to the court’s consideration of:

the value of the owner’s alleged trade secret;

the degree of competitive harm an owner would suffer from the dissemination of the owner’s alleged trade secret to the other party;

whether the owner is alleging that the other party is already in possession of the alleged trade secret;

whether a party’s representative acts as a competitive decision maker;

the degree to which a party’s defense would be impaired by limiting that party’s access to the alleged trade secret;

whether a party or a party’s defense would be impaired by limiting that party’s access to the alleged trade secret;

the stage of the action.

Veteran’s Employment Preference Policies

Under Texas law a private employer may adopt a policy to give preference in employment decisions regarding hiring, promotion, or retention of a veteran over another qualified applicant or employee. Texas employers who have such a policy may now notify the Texas Workforce Commission and the Texas Veterans Commission that they have such a policy so the employer can be included on the commission’s website of employers who give veterans preference.

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